Silicon Valley execs cautious on jobs

SAN JOSE, Calif. – A generally upbeat job outlook among top executives in Silicon Valley dimmed somewhat this year, according to a new report. The survey did not explain the slight decline in optimism, but it’s not surprising given the sluggish pace of macro-economic recovery since 2008.

Forty-six percent of the executives surveyed in the 10th annual Silicon Valley Leadership Group (SVLG) poll said they expect to add jobs in 2013, and 50 percent added jobs in 2012. That’s down from 55 percent who said they would add jobs in 2012 and 60 percent who said they added jobs in 2011.

In the past year 15 percent of those survey said they have reduced their workforce, significantly up from less than ten percent in 2011 but down from more than 20 percent in 2010. The good news is only 10 percent expect to reduce jobs in 2013. In 2012, 14 percent expected to reduce jobs.

"There are still underlying concerns that the economic challenges in parts of Europe and the slowdown in China could cause [Silicon Valley’s growth] engine to sputter,” said Carl Guardino, chief executive of SVLG, speaking in a press release.

In related questions, 16 percent of executives said they shipped jobs outside California in 2012, 46 percent citing the high cost of labor as the top reason. Ten percent said they sent jobs outside the U.S. last year, 61 percent citing labor costs as the top issue.

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After easing off a bit, concerns about housing costs are back on the rise.

The survey also described a laundry list of evergreen social and political concerns of the 177 Silicon Valley executives. For example, they praised the access to talent and capital the Valley offers, but complained about high housing costs and taxes.

The group said its top policy issues include:

Comprehensive tax reform

H1-B visa/green card reform

Reducing the federal deficit

STEM education

Expanding and making permanent the R&D tax credit

The report is now online. A sampler of its findings is included on the following pages.

There is no doubt labor cost and high medical cost are the primary contributes to losing jobs. The valley might have better access of capital and better talents in various areas to (re)invent a business. Yet, once the business is on track, cost reduction kicks in. There isn't much reason to keep operation in the Valley. Management, then, would need to make a tough decision to run the operation elsewhere.
On the other hands, there is cost to employees. Paying high salary, most employers expect no training offer and start contribute first day at a new job. What worst is this practice applies to new employees fresh out from college.

The so called "H1-B issue" is completely bogus. There is no shortage of very highly qualified technical people in the Valley. But there is a dire shortage of those who are willing to work for peanuts. This is what I have to say to those executives who thought H1-B visas ware a major concern: When you look for a top-of-the line engineer, pay him like you pay your VP of marketing, and see how many applicants you get! When you need an average engineer, you can pay a lot less, but you still need to pay more than what you plan to pay for an H1-B visa holder.

@Ogemaniac
The corporations only need H1B visa-ed employees if they are lower-cost than already present workers. This limits what companies would be willing to pay.
The alternative is auction the H1B visas to the aspiring workers but again their ability to raise capital with which to bid may be limited.

My solution to the H1B issue? Auctions.
Sell 10,000 slots each month (around half again more than we give away now) for whatever money the market will bear. If employers really need these people, they will be willing to fork over the cash. This will also have two nice side benefits
1: A few billion in revenue each year for the government
2: Most concerns about "cheap labor" evaporate as companies will in theory bid away any potential gains from labor arbitrage